What else is new?

But let's never forget the role of the credit cards. If the consumer collapses, there will be plenty of blame to spread around.

but only a portion of the country would believe your spin since "guns don't kill, people do."

To boldly go...

I'm just curious, we here in America think the economic world revolves around us right? It's the Earth is the center of all before Galileo. But why? Why are we so important? Because we buy more 'stuff'? That's the reason I've heard. Of course that plays into the huge trade deficit but whatever, right?

But that leads us to now. We are broke. We're in debt up to our eyebrows. Who can buy anything? The rich? They are nervous & would rather pillage the institutions of the poor but those are burning to the ground. Sure, there's still some credit floating around out there. I have some myself but they can kiss my rear end if they think I'm going to use it. So what happens to the whole big picture when Americans are no longer willing or able to buy more? What happens when the engine seizes up?

I see foreign markets bouncing back today...so far. Good for you all, the rich feel better for now. 3/4 pts is certainly a big deal. But our infrastructure is rotten to the core. The stone has little blood left. How much more bad credit can these lenders give to the people here who have nothing left? I smell temporary. It's only a matter of time before the snowball starts rolling downhill again. It snagged on a tree but it's still a long way to the village & that's exactly where it's headed.

I hate to be a doomsayer but seriously? People are already in debt for life. Where do we go from here? Is St. Peter going to be checking credit scores at the Pearly Gates? Do they allow Americans to take debt into the afterlife & count that as a profitable new market oportunity? Speculation & greed economics apparently leads to a hand full of nothing but empty promises & bad loans. We now make nothing but we do buy everything 'on credit'. Someone has to pay sometime... Here's the tab... Oh $hit, you said you'd get this one right?

Please someone MSG me and explain how I just don't 'get it' and it's all just a hickup. Tell me how it's all working just fine and how it's all going to be OK. Oh and if you know, tell me where the magic lamp is so I can give it a rub or two & get my wish in there too. As far as I know there are only a few things in the universe that are infinite. And none of them involve money or debt (at least not in reality).

The sun has & will burn for ages. It will burn until it's out of fuel. Our economy's fuel seems to be shopping. But we seem to be out of shopping fuel. No home. No healthcare. No savings. No credit. What fuel do we, the masses, have left? As I said, please tell me how I'm just not getting it and it's all fine. I want to wake up & feel the sky's the limit, I really do. But there has to be a line, otherwise screw all this noise I'm just going to charge the hi-life then charge some more and simply say my great grandkids will pay for it (& I still have no kids!)... Pass the champagne & let's watch the universe revolve around us!

Re: It's a high stakes gamble, but if they can prevent political, financial markets, regulatory, and monetary supply reform, they simply have to shelter wealth elsewhere until the US market hits bottom and then buy back in at fire sale prices.

Except that there's no place safe right now. If they parked their money in foreign markets they just got burned big time Monday and there's more where that came from. Recessions generally fleece the rich (of course they can afford it; they will not end up in soup kitchens). They took a bath in 2001 and will get keelhauled this year too.

Re: I wonder how many foreclosures happened to people who consolidated high-interest credit card debts into one, low, tax-deductible monthly payment.

Foreclosures occur when first mortgages go bad. If a home equity line goes into default there's little incentive for the creditor to foreclosure (though legally he can) since the first mortgage holder will get the proceeds of the foreclosure sale with little or nothing left over for the second, especially nowadays with property prices dropping. Second mortgage and HELOC defaults generally end up in collections same as credit card debts.

The Obvious Solution

The obvious solution to all our current financial markets woes is, of course, more deregulation, more lobbyists with fat checkbooks and pre-written bills to pass, and don't forget the bigger tax breaks for the poor ailing industry!

And that is a brief synopsis of my very modest proposal.

What really gets to me is that the removal of usury laws, the tightening of the bankruptcy law, and the allowance of refinancing and second mortgages to extract cash from the inflation and low interest rate driven housing appreciation are all just banking ways to farm the poor and middle class for money.

The working and middle class are urged to spend, and the money comes from rising home prices because wages aren't going up. The mechanisms of the cash-farming are things like high-interest high-fee credit cards, sub-prime loans and student loans for the middle class and high-interest pay-day loans, sub-prime loans, super high interest rate loans on used cars, rapid refund loans that cost 500% annual rates on a loan that gets the money to a person two weeks earlier than the IRS would have, and so on.

The union busting program of the Reagan Revolution has made it possible for the economy to become more productive, but the additional profit from that productivity all goes to the wealthy.

American under the Reagan Revolution has become a nation in which the poor and middle classes are taxed and farmed for money to give to the banks and the super-wealthy.

Oh, and the deregulation of business and financial institutions during the Reagan Revolution has returned us to the boom and bust economy that characterized America from about 1870 to the Great Depression. During the booms the rich get richer, and during the busts the poor get poorer, but the rich do not suffer. The absence of universal health care accentuates the lowering of the life styles of the poor.

It's a system, planned to create a new vision of America. Welcome to the Latin American social model of a few very wealthy families surrounded by a lot of poor people and a struggling, small middle class.

When Condi Rice gives her speech that the American economy is strong and resilient, has she noticed that 70% of demand is consumer demand, and that since the failure of wages to rise along with productivity the only source of increased consumption has been rising home prices? Now that home prices will no longer rise, where does our economy get the demand that makes it function?

We are currently in a consumption-driven Recession, and the consumers have run out of new sources of funds to finance consumption. The structure of our economy is neither strong nor resilient. Instead it is the the design the Reagan Revolution has given us. Instead of competing with Europe and Japan, we are now competing with Mexico and Brazil.

The bankruptcy law was just one step in the new and defective structure of America's economy.

Living within your income seems to be an overlooked solution based on my review of the article and comments. We seem to have lost the concept of "responsibility" for our actions.

Having said the above, I have no love of any industry that can "buy" legislation at the congressional supermarket. This amounts to corporate welfare. We have become a nation of, by, and for the corporations.

Take the responsibility to live within your income.

I'm posting here simply because I want to address several people on once ;-)

Perhaps I wasn't as clear in my previous post as I thought I was. I did not for one moment mean to suggest in any way that people should live on their credit cards JPF. I for one got tangled up with them when I was in college. I unwisely used them to eat and help while paying my way through college (took all the money I had and then some). I'll never be using them unwisely again... As for that college tuition, I will finally be out from underneath it this year after 14-15 years of consolidations and repayment. In hindsight I've payed far more for that schooling than it ultimately was worth but that's how I goes I suppose. This is the nature of the debt I mention as being essentially unavoidable. Go to college = to into debt. I know you are older than I so I'm not sure what your educational burden was. But I'm sure mine was probably higher and kids attending now will pay more than either of us did. These are the "different times" variables I mentioned. I always think of car insurance. We're required by law to have it. They jack up your rates at any opportunity. And if you are ever in the situation where you need to use it they make getting your settlement more traumatic than the accident itself. There's just something not right in that being "the way things are".

The way I see it debt and it's exploitation are now very important components of our nation's economy. Much more important than manufacturing is now. And there is certainly room for blame to be assigned to people that abuse their credit cards (or in my mind use them at all - I prefer my debit card... basically paying cash). But some due credit should be assigned to the system we're now forced to live within and to those who manipulate it to their benefit and our detriment.

Now Steve, I too am not anything remotely resembling an economist. If possible I'm even less than none at all. Some of what you've said makes plenty of sense. But I am a little troubled by your language (not to be overly sensitive) because I feel it tells a little of your ultimate position. I could of course be complete wrong here.

This foreclosure crisis of course has been exacerbated by corporate misconduct. It is unfortunate that corporate misconduct is forcing many homeowners into foreclosure.

Unfortunate is a word used to describe a particularly bad haircut. It is not a word I personally would use to describe "corporate misconduct" which now results in destroyed lives. It's this kind of language which contributed to the overall impression I received from reading your posts that felt a bit like - manipulating businesses, that's life / consumer victims (saps), have themselves to blame for it all. I may have been reading more into your posts than was there and if so I apologize. But in using the word unfortunate and framing this as you did here it does paint a far less damning picture of the real criminals in this poor economic climate while making sure to target those who are suffering (admittedly in some cases they deserve a disparaging eye) .

As I've said now, I do not mean to suggest there is no individual responsibility but I would simply like to make sure that we also include all of the other relevant variables and not forget those who happily exploit these people and situations when we are having our conversations. I am personally more inclined to blame the con man over the sucker/sap. But I think there's plenty of fault to go around! ;-)

Speaking of fuel and fires....

I ran out of oil Thursday night. It was a little scary to wake up to a house that was 40 degrees. I called the ex and he brought by 10 gallons of disel. I better get a five gallon gas can so I will be prepared next time. I hate calling him.

I had to find someone to deliver fast, and they all wanted cash (or a credit card). No checks. That says something bad about the economy. So, I had to wait until today to have that much cash in the bank. $473.85 for 150 gallons. That should last 3 weeks, hopefully. I keep the thermostat at 58. Not exactly comfy, but it will do. Much better than 40.

The guy I ended up using (came by this morning) was the owner, and he wants me as a customer. He said he's seen a lot of problems over heating oil this year. I bet he has. :(

I think it might be worth the few cents extra a gallon to use a local guy. I usually used a national company, which had lower prices per gallon, but could care less that I was out of oil. No emergency deliveries.

Helping broke people like me isn't part of their business model.

I have a feeling a lot of people are using credit cards to pay for oil. That's a pretty scary thought, really. But I don't think that "living beyond your means" takes into account the cost of heating oil. Who could predict the increase? A lot of careful budgets blown no doubt.

This is how people get screwed with credit cards. I wonder if there isn't some kind of collusion going on. After all, the reason for the spike in oil prices isn't based on supply and demand. It's all speculation. Easily driven by a few unscupulous individuals.

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